Under Armour to pay US $ 434 million to settle lawsuit over sales reporting disclosures

Under Armour has announced an agreement to pay US $ 434 million to settle a 2017 class action lawsuit alleging that the sports apparel maker defrauded shareholders by misrepresenting its revenue growth to meet Wall Street forecasts.

The proposed settlement, pending court approval, would avert a scheduled 15th July trial in Baltimore federal court. The lawsuit claimed that Under Armour and CEO Kevin Plank intentionally misled shareholders about the company’s financial health.

In 2021, Under Armour, based in Baltimore, agreed to pay US $ 9 million to settle Securities and Exchange Commission (SEC) charges that it misled investors about its revenue growth. The SEC investigation found that Under Armour had failed to disclose to investors its practice of accelerating or “pulling forward” US $ 408 million in existing orders during the second half of 2015.

Mark Solomon, lead counsel for the shareholders and a partner at litigation firm Robbins Geller Rudman & Dowd, described the proposed settlement as an “important win” that highlighted the crucial role of pension funds in holding companies accountable.

Under Armour stated it plans to pay the US $ 434 million settlement using cash on hand and by drawing on its US $ 1.1 billion revolving credit facility. Additionally, the company said in a regulatory filing that it would continue to separate the roles of chair and chief executive officer for at least three years.

Under Armour has consistently denied the accusations, asserting that the settlement is not an admission of fault or wrongdoing. The company expects its total accrual in legal proceeding contingencies related to the lawsuit to reach US $ 434 million in the first quarter of fiscal year 2025, up from US $ 100 million at the end of fiscal 2024.